Give and take

IT firms are essential to CIOs as they provide them with the tools they need to do their jobs. However, as many vendors are often larger than the end user organisation, the client/vendor relationship becomes skewed. The key to a successful partnership, and ensuring that power remains with the user, is excellent relationship management.

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By  Alicia Buller Published  November 7, 2004

|~|HANDSWEB200.jpg|~||~|“You are not meeting your commitments to me,” says the CIO. “We are trying, but your priorities keep changing,” answers the vendor. Sound familiar?

This is the symptom of a relationship in trouble: the loss of trust between a vendor and a client. In some cases, this is caused by poor performance or the inability to follow the terms of the contract. More often though, both sides are trying to do their best.

However, doing their best is not good enough when businesses are not sure what they are expected to do. The way to build trust into client/vendor relationships is to ensure that each side knows what to expect of the other, and agrees on how to measure performance.

According to research from analysts at AMR, only 23% of end users are ‘very satisfied’ with their enterprise resource planning (ERP) vendors. Peoplesoft took the lead in the ‘somewhat satisfied’ category with 57%, while SAP followed close behind with 53%.

Balancing relationships is a tricky business, and it is twice as challenging in the Middle East due to its business, cultural and political landscape. However, there is a genuine effort on the part of the global IT players and their partners to work in harmony. Take Computer Associates (CA) for instance.

The traditionally hands-off vendor has gone so far as to create a direct presence in the Arab states. Likewise, Sun Microsystems is re-skilling its entire workforce and it has also introduced industry-focused business development managers to the region.

“It’s important that a vendor makes an attempt to understand our individual needs, our size and the industry we work in — so they can put it in context,” says Krishna Kumar, IT manager for GlaxoSmithKline, Gulf & Middle East.

The pharmaceutical company’s IT infrastructure is looked after by Alpha Data, HP and IBM. “Deeper customer understanding would definitely help improve the relationship,” says Kumar.

However, it’s not an easy task to find out what clients really think of their vendors. There’s a lot at stake. Customers do not want to upset the vendor that manages their IT infrastructure — for fear of damaging the relationship and perhaps getting less than preferential treatment.

This seems to be a paradoxical way of going about things, particularly when it’s considered that local vendors and clients tend to rate ‘trust’ and ‘openness’ as key factors in a healthy relationship.

“Trust on both sides is imperative for an effective relationship,” says Charles Ashman, manager of infrastructure business, HP Gulf & Levant. “We trust them [the clients] that the advice we give them will generate a return for us, and they trust us to give them best-in-class guidance and solutions for their requirements. This includes maintenance, support and the customer experience.”

Ashman believes that trust between the two parties is often an issue in the region and difficult to resolve. “IT vendors, in general, are not trusted — as any other seller is not trusted by the customer. It’s a battle... You always get the feeling that it’s not an open relationship and it usually takes a long time to get to the stage where the customer will truly share its requirements and that emotion [mistrust] is overcome,” he claims.

Trust is a serious issue and it’s based on concrete tenets: quality of vendor’s technical skills, reliability, responsiveness, value-add and honesty. Ashman also believes that price is an important facilitator of trust.

“Price and value is particularly important in the Middle East region, they benchmark that [here]. It is easy to lose trust if the vendor doesn’t keep clients happy in terms of their budgets,” he says.

Equally, it’s important that client and vendor respect each other: the client should openly reveal its true needs, while the vendor should offer the best solution at a competitive price. Clients always appreciate honest, value-add advice, which will often be repaid in trust and possibly a sale. The key to adding value is that vendors must know the client’s needs.

Marc Heger, Gulf regional manager for Sun Microsystems, is the first to admit that there’s room for improvement in customer relationships. In order to strengthen relationship with its customers; Sun is seeking the help of a customer relationship management (CRM) solution, which it has deployed for its customer-facing workforce in the Middle East.

“We have a good relationship with tier one customers, but there are huge grounds for improvement,” says Heger. “So we’ve re-skilled our entire team to take a proactive approach towards understanding our customers’ needs,” he adds.

Sun seems to have the right idea. Customers are seeking expert advice that can guide them through complex range of solutions and sophisticated IT implementations. In order to understand their customers’ needs, vendors have to know their business.

“They [vendors] need to put strategies in place that ensure their customers’ needs are addressed,” says Kumar.

It’s all very well for vendors to research the client’s needs, but, in turn, the customers must also provide their suppliers with appropriate information. US-based business consultancy firm Score suggests that clients should make an effort to get to know their vendors.

Brent Pienaar, IT coordinator at Dubai Women’s College (DWC), notes that while vendor relationships used to have a reputation for being fraught, things are slowly improving. “I have noticed that vendors such as Microsoft are starting to make an effort to improve relationships with their customers.

We have been offered more free education courses and seminars from Microsoft, which is a step in the right direction. Traditionally, vendors focused on marketing and not customer relationships. Now it’s getting better — vendors are trying to get more hands-on with their clients — but there is still a long way to go,” he adds.
||**|||~|Mourad-Zuhnyweb.jpg|~|Murad Zouhny, business partner organisation manager at IBM Middle East, concedes that ‘accounts receivable is difficult’.|~|HP recently upped the ante with its customer relationship efforts in the region. The computing giant has been training its staff on how to successfully manage business relationship with companies in the Middle East.

“It’s critical that vendors maintain a high skills base and HP has been investing in this a lot. We make sure that clients don’t have to wait for specialists, they’re here on the ground in the Middle East and we keep them here,” says Ashman.

“It’s important to have a good understanding of the client’s environment. The team should never ‘learn on the job’, so to speak. Our teams should be able to add value from the moment they walk in,” he adds.

The availability of resource is another issue concerning the region’s end users. Businesses need to feel that their IT supplier supports them 24/7. “Trust is formed from how well we respond to product warranty calls and failures. So every standard warranty comes with a clearly defined set of correction parameters,” Asham explains.

A lapse in resource availability is not always the fault of the vendor — prompt resource allocation requires open lines of communication between the two parties. It is difficult for a vendor to allocate resources if it is not aware of the problem, or if the customer hasn’t communicated all the information. Equally, the vendor should be honest about the state of affairs and not over commit.

Other issues that lead to insufficient resources are the procrastination of customer buying decisions and late payment. Todd McGregor, regional vice president of Meta Group Middle East, believes that protracted and painful tendering processes frustrate local vendors.

“The biggest single complaint is when the vendors respond to a tender in good faith and confidently assume that a decision will be forthcoming and it never does. Equally frustrating for the vendor is when there is no clear or official explanation as to why the entire ‘formal’ process was not carried out,” he says.

“[It seems] the overall message from the IT vendor community to the procurement teams and tendering committees across the Middle East region is twofold. One, making sure that they communicate and two, if the vendors are going to take the process seriously they expect the customers to do the same, ” McGregor adds.

Regional vendors are reluctant to offer their opinion on the delayed tender issue. Murad Zouhny, business partner organisation manager at IBM Middle East, concedes that ‘accounts receivable is difficult’ but declines to comment further. Instead, he expresses concern at the duration of the tendering process in the region.

“The biggest challenge [here] is the decision cycle and the time that it takes for customers to finalise a deal. It can sometimes take more than a year — up to five times longer than it might take to process a similar deal in North America,” he says.

Another sore point with local vendors is the emphasis that the end user community tends to place on ‘cost’, as opposed to value and long-term return on investment (ROI). “Cost is the wrong focus in IT. Why worry about what something costs now if you’re going to run it for three years? You’ve got to look at the long term,” says Ashman.

In light of all these factors, it is fair to say there has to be a two-way communication. Vendors and clients need to communicate more frequently and preferably face-to-face. Tailored and effective solutions can’t be bought off a shelf — they require both time and knowledge from the vendor and the client.

Shakeel Khan, senior officer of vendor relations at Union National Bank, is satisfied with his relationship with the bank’s IT partners. “I am happy with the quality of the bank’s vendor relationships. This is because they’re usually face-to-face. You should be able to talk to someone in person to truly gauge what they want and how he or she will work with you. They [different vendors] usually visit me once a month,” he says.

“The information they provide is valuable. I find the ideas and insights into the market useful — and if a product line is obsolete they advise me on where to go next. However, I try to stay on top of the market [trends] so I don’t get persuaded into buying products that are unnecessary,” Khan notes.

Vendors are becoming increasingly aware of the importance of face-to-face contact in establishing a mutually beneficial relationship. Personal, frequent meetings enable them to sell their solutions and learn more about their customers, while at the same time, the client gets a rich service that helps them leverage the benefits of IT.

“When an account is classified as ‘top’ we work hard to bring the relationship closer, so that we can interact with the client directly and understand its needs,” says Ghazi Atallah, general manager at Cisco Middle East.

“The account managers are with [tier one] clients, day in and day out. Direct contact is absolutely crucial in these cases. Vendors need to build a very close relationship with their clients to understand their issues,” he explains.

However, sometimes clients need to work with third parties for solution implementations or other IT services. So the vendor/client relationship is not just two-way, but often multi-pronged.

“Vendors also work closely with resellers, so they should develop a three-way relationship with the customer... Sometimes third parties are only interested in the sale, so they need to be properly educated by the vendor in order to complete the relationship,” says Pienaar.

While most end users are relatively satisfied with their vendor relationships, the region has yet to fully embrace the next stage of bonding: partnership. This is where the line between traditional seller/buyer relationships and mutually beneficial agreements becomes blurred.

“We recently signed a memorandum of understanding (MOU) with Cisco, which is helping us with the education curriculum by providing us with registered Cisco training — it also helped us design, validate and certify our network. The MOU also states that it will take students for work placements,” says Pienarr.

“However, sometimes IT vendors aren’t truly committed to their customers, especially when it comes to education and getting the local people into the work force. We asked our vendors to participate in our annual career fair, for example, and they declined. They’re not pro-active.”

Cisco has caught on to the value and mutual benefits associated with ‘partnerships’. The networking giant is working with the Dubai Development and Investment Authority in two areas — training small-to-medium sized businesses (SMBs) on the benefits of IT, and is also helping to train young business leaders.

Historically, local governments have been the most ‘hands-off’ organisations with vendors, but now they’re willing to partner with IT corporations to exploit business opportunities.
“There is a myth in the Middle East that customers can’t really get close to the technology vendors because they should keep each other at arm’s length,” says Atallah.

“That myth is being shattered right now. There is a change of mind-set in the Middle East region’s customers — they are beginning to see the value in partnering with a vendor and they are more willing to work together than before,” he adds.

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